Predatory pricing is best exemplified when a firm
A) cuts its prices in order to increase competition in the market.
B) exercises its monopoly power by raising price.
C) cuts its prices temporarily in order to drive out any competition.
D) requires consumers to purchase products together rather than separately.

Question

Quizplus · Accepted Answer

Predatory pricing occurs when a firm temporarily cuts its prices to a low level with the intention of driving out any competition in the market. Once the competition is eliminated, the firm can raise its prices and reap the benefits of being the dominant player in the market. This practice is illegal in many countries as it stifles competition and can harm consumers in the long run.

Predatory Pricing Is Best Exemplified When a Firm